The operator introduces the Marriott International Third Quarter 2023 Earnings Call and reminds participants that the call will be recorded. Jackie McConagha, Tony Capuano, Leeny Oberg, and Betsy Dahm are present on the call. Forward-looking statements are mentioned and the disclaimer is given. The third quarter results are described as "terrific" with global demand for travel remaining strong and a 9% increase in worldwide RevPAR compared to 2022.

In the third quarter of 2023, RevPAR increased by over 4% in the US and Canada and 22% internationally, with significant gains in Asia Pacific. This was driven by strong demand in the leisure transient segment, which accounted for 45% of global room nights. Business transient demand also saw improvement, particularly in the technology and finance industries. Group revenue showed a remarkable performance, with a 9% increase globally and 5% in the US and Canada. The segment is expected to continue driving revenue growth in the future, with a 12% increase in fourth quarter 2023 group revenues and 19% increase for the full year.

In the third quarter, US and Canada group revenue for 2024 is pacing up 14% compared to 2023, with a 9% increase in room nights and a 5% increase in average rates. Cross-border travel is strengthening, particularly in Asia Pacific due to global events and increased airlift. The company is focused on driving membership and engagement with its Bonvoy loyalty program through digital and technology transformation. The Bonvoy mobile app and collaborations with companies like Uber and Eat Around Town are seeing growth. The strategic licensing arrangement with MGM is expected to launch in early 2024. Net rooms growth for 2023 is expected to be higher than previously expected, with the addition of 37,000 MGM rooms.

Despite the timing shift of the MGM deal, the company's three-year net rooms growth is expected to remain at a steady pace. The company's pipeline has reached a record high, with a strong interest in conversions. The company is also seeing success with its mid-scale brands in various regions. The company is aware of global tensions and hopes for peace. The company's third quarter results exceeded expectations.

In the third quarter, RevPAR grew 9% above expectations, driven by gains in Asia Pacific. Occupancy and ADR also increased, leading to a 13% growth in total company gross fee revenues. The wildfires in Maui had a negative impact on IMFs, but they still saw a 35% increase. Non-RevPAR related franchise fees grew 8%, with a strong performance from co-brand credit cards. Owned lease and other revenue also saw improvement. Adjusted EBITDA grew 16% and diluted adjusted EPS grew 25% year-over-year. The company remains committed to their investment-grade rating and returning excess capital to shareholders through dividends and share repurchases.

The company has reduced its share count by 23% in the last seven years, despite facing challenges such as COVID. They have also invested in innovation and growth. The company is raising its full-year RevPAR guidance due to solid forward bookings and higher expectations for the fourth quarter. RevPAR growth is expected to be higher internationally than in the US and Canada. The company anticipates a 17-18% increase in total gross fee revenues for the full year, with some offset from lower residential branding fees and softer results in certain countries. There has been some impact on demand in Israel and surrounding countries, but it is not significant for the overall company.

Marriott is closely monitoring the situation and expects non-RevPAR related fees to increase by 5% for the full year, with residential fees being lower due to fluctuations in sales. They also expect G&A expenses to be higher and adjusted EBITDA and EPS to increase. They plan to return a significant amount of money to shareholders and have increased investment spending for the year. They are optimistic about lodging demand and pipeline growth for 2024.

Tony and Leeny are now taking questions and the first one is from Shaun Kelley with Bank of America. He asks about the development side, particularly in the US, and the slip in the in-construction number. Tony explains that the ebb and flow of under-construction is both good and bad, as hotels open and leave the pipeline. He also mentions the constriction in the debt markets, which is preventing them from getting back to pre-pandemic levels of new construction starts, especially in the US. Leeny adds that this is also affecting Europe, where conventional debt financing is relied upon heavily by their development partners.

The company is encouraged by the increase in conversion activity and steady improvement in construction starts. They are confident in their multi-year net unit growth numbers and expect approximately 30% of openings in 2024 to be from conversions. The financing environment is still open for strong brands and locations, but it may take longer for rooms to get under construction. In Asia Pacific and other markets, there is less dependence on debt markets and more progress in rooms under construction.

The speaker is pleased with the progress of new rooms being built and opened, as well as strong demand for their brands and signings for future projects. They are not yet ready to give formal guidance for 2024, but expect continued demand for travel and a more normalized seasonal pattern in the US. Their Q4 guidance reflects this.

The company has strong fundamentals and expects low supply growth and high conversions to continue into 2024. They also anticipate strong growth in the special corporate rate and group pace, which should lead to sustained ADR. In addition, their luxury properties have shown positive growth. The company is optimistic about the future, but their capital return plans will depend on budget and investment decisions.

The speaker discusses the company's plan to put the Sheraton Grand Chicago to Marriott in 2024 and to continue with their current strategy of maintaining credit ratios and returning capital to shareholders. The questioner asks about the company's focus on growth and the speaker explains that they do not see it as a binary choice between luxury and midscale, but rather a balance between the two.

The speaker is excited about the success of their entry into the mid-scale market, with letters of intent signed in 10 new countries and deals for their new brands. They plan to continue focusing on the luxury segment while expanding into mid-scale, with a mix of new builds and conversions. There is no significant increase in competition or costs in the mid-scale market, and franchise partners are enthusiastic about the company's entry into this tier.

The company is engaged in discussions about midscale opportunities on every continent and is not doing anything out of the ordinary in terms of deal terms or capital participation. They are not giving specific guidance on unit growth for next year, but the focus should be on the two to three year CAGR rather than year-over-year numbers. The recent acquisition of MGM will positively impact 2024's room count, and the company remains confident in their 5% to 5.5% net rooms growth over the 2022-2025 period. More details will be provided in February.

The speaker responds to a question about the company's expectations for unit growth outside of MGM for next year. She explains that they are confident in their three-year growth plans and have seen a quarter of a point increase in their 2023 numbers compared to the previous quarter. However, they will have more specific information in February. The speaker also addresses a question about incentive management fees, stating that overall the company is up in the US and Canada compared to last year. However, they were impacted by the Maui fires, which will affect their IMF. The speaker also clarifies that the MGM delay has not had an impact on their EBITDA guidance for Q4.

The speaker discusses the current state of group bookings and mentions that the percentage of hotels earning incentive fees in the US and Canada has increased. They also mention that IMS for the year is higher than the full year of 2022. They clarify that the delay in the integration of MGM will not have a significant impact on fees or EBITDA. The speaker notes that group bookings are back to being a similar percentage of business as pre-COVID.

The speaker discusses the proportion of business related to groups, which has normalized, and notes that leisure and business transient have swapped while group remains consistent. The speaker also mentions that group revenue growth in the quarter has been strong globally, and that there is continued forward booking strength in group. There are no notable trends in corporate group meetings and incentive travel.

The speaker states that they have seen consistent strength in the consumer and a little bit of trade down in price points. There has been an increase in rate in the luxury tier in the third quarter, but they believe it may just be a temporary trend. They are entering the mid-scale tier for the first time to capture a value-driven consumer. They are also close to reaching pre-pandemic levels of cross-border travel.

The speaker discusses the recovery of international markets and the role of domestic demand. They also mention the importance of the middle class consumer and their appetite for cross-border travel. The trend of prioritizing experiences over material goods is also highlighted, with credit card data showing that this trend is now prevalent across generations. The speaker is optimistic about the recovery in corporate travel.

In response to a question about the long-term expectations for large manage industries, Tony Capuano explains that while there are some factors impacting the pace of recovery for big corporations, there are also strengths in other areas such as group travel and blended travel. He also mentions the possibility of more partnerships like the one with Rappi in the future.

The speaker discusses the benefits of the Bonvoy platform for their company, including strengthening connections with guests and creating partnerships like Rappi. They also mention the potential for future partnerships and thank the audience for their interest.

This summary was generated with AI and may contain some inaccuracies.